Nice try. Not a court case but an opinion in a magazine. Again, I'm waiting for a court case to be cited. Good luck.
You're going to be waiting for a while.
Here's the deal:
Yeah, I've seen engines go way past TBO and look just fine when they came apart. I've also seen engines that swallowed their own oil pump with 200 hours to go and otherwise perfect inspections... But that's what TBO is based on, averages, and they don't sit in the middle of the average range either because to Lycoming or TCM one engine failure for unexplained reasons prior to TBO is bad news.
So, you're a mechanic, and you've seen all of this, and you know that TCM has good lawyers, engineers and experts on staff, and a published document stating their recommendation based on engineering data and way more testing and service history than you could do in a lifetime.
Are you willing to give them, the deep pockets, a get out of lawsuit free card? Because if they get released (and they easily will in this scenario) then its all eyes on you and you now hold the wet paper bag of burden of proof.
"What was your basis for determining that this engine was healthy to go past what the manufacturer says it should?"
Cape air can probably get away with it since they probably have mountains of data that says they can and an FAA APPROVAL to do it.
From a risk management perspective, we're now down to our last line of defense... How good is your lawyer?
Sorry, too many chances to bail on even a small amount of liability passed up for this mechanic.
As far as case law, I dont think I even know how to look that sort of thing up, maybe ask a lawyer instead of a mechanic or a cheapo aircraft owner.
TL;DR, maybe the engine will be fine, hell, probably it will be fine, but if it isn't... Well... I hope you're brave.
I might be wrong but I've been doing it for 13 years now and there is no blood on my hands and I've never had to defend myself in court, so I think I'll stick with it, if its all the same to you.